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1、2023ANNUAL REPORTTable of ContentsChair of the Board of Directors Letter to Shareholders3Chief Executive Officers Letter to Shareholders5Managements Discussion and Analysis79131521254447545557596061627071 Overview of Cineplex Business Strategy Cineplexs Businesses Overview of Operations Results of O
2、perations Balance Sheets Liquidity and Capital Resources Adjusted Free Cash Flow and Dividends Share Activity Seasonality and Quarterly Results Related Party Transactions Material Accounting Judgments and Estimation Uncertainties Accounting Policies Risks and Uncertainties Controls and Procedures Su
3、bsequent Events Outlook Non-GAAP and Other Financial Measures Reconciliation:Amusement Solutions(P1AG)75Financial Statements and Notes8585869193949596 Managements Report to Shareholders Independent Auditors Report Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Stateme
4、nts of Comprehensive Income(Loss)Consolidated Statements of Changes in Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements98Investor Information1637281Letter from the Chair of the Board Dear fellow shareholders,It is my pleasure to write you today as Chair of the
5、Board of Directors of Cineplex Inc.I am honoured to lead this great group of Directors and be part of an organization that I strongly support.Despite an ever-evolving entertainment landscape,Cineplex achieved strong financial results in 2023.We experienced robust performance in Q2 and achieved a rec
6、ord breaking Q3 the best in our companys history.We continue our efforts to deliver long-term,sustainable value to our shareholders.We are confident that Cineplex is well-positioned,and firmly believe that we have taken,and are continuing to take,the steps necessary to improve Cineplexs financial he
7、alth and ensure its continued success.Return of Business and Sound Strategic Plan Throughout the past year,the team responded to content supply challenges by implementing measures aimed at enhancing operational efficiency,ensuring disciplined capital allocation,revitalizing our theatrical exhibition
8、 offerings,and driving growth within our diversified businesses.These efforts were instrumental in driving growth across all of our business units and resulted in Cineplex delivering strong financial results.Recognizing the importance of strengthening our balance sheet,we took decisive action by sel
9、ling our amusement solutions business.This strategic divestment was an important step towards realizing the Companys focus on deleveraging and executing on our comprehensive refinancing plan.We are confident that these actions will benefit the business and generate long-term value for our shareholde
10、rs.Strength of the Board The strength of our Board is essential to delivering excellent corporate governance.Throughout the year,the Board worked closely with senior management to ensure that Cineplexs strategy continues to foster growth and innovation.In addition,our ongoing executive succession pl
11、anning initiatives ensure the robust management pipeline for navigating future challenges and opportunities.I am proud to report our commitment to inclusion and diversity within Cineplex is well reflected in our Board.Currently,four female members constitute 44%of the Directors or 50%of the independ
12、ent Directors,while four members of underrepresented communities make up 44%of the Directors.A diverse Board with a broad range of skills and experiences is crucial in supporting Cineplexs strategic objectives.Path Forward:A Promising Future Looking ahead,Cineplex is poised for a strong future,buoye
13、d by our commitment to enhancing the guest experience and driving growth within our businesses.With the resolution of the writers and actors strikes,we anticipate a steady supply of film product and the continued resilience of the exhibition business.Coupled with the comprehensive refinancing plan,w
14、e are well positioned to embark on the next phase of our growth journey.Your Board remains focused on addressing our stock performance and on charting a course towards sustainable growth,profitability and shareholder returns.Cineplex Inc.Letter to ShareholdersCINEPLEX INC.2023 ANNUAL REPORT LETTER T
15、O SHAREHOLDERS3I want to express my gratitude to our shareholders for your continued support of Cineplex.Your confidence in our vision and leadership is deeply appreciated,and we are fully committed to delivering results that reflect the trust you have placed in us.On behalf of the entire Board,I wo
16、uld like to thank the Cineplex team for their passion,resilience,and tireless efforts.Sincerely yours,Phyllis Yaffe Chair of the Board,Cineplex I Cineplex Inc.Letter to ShareholdersCINEPLEX INC.2023 ANNUAL REPORT LETTER TO SHAREHOLDERS4LETTER TO SHAREHOLDERS Letter from the CEO Dear fellow sharehold
17、ers,As I reflect on the year,I am tremendously pleased that we have once again demonstrated why we are a North American leader in entertainment and media.Despite various challenges,Cineplex demonstrated focus,resilience and achieved significant milestones.Financial Performance Our 2023 revenues incr
18、eased by 25.9%to$1.4 billion compared to the prior year,and our adjusted EBITDAaL from continuing operations nearly tripled to$157.4 million.Additionally,our adjusted EBITDAaL margin from continuing operations improved by 640 basis points to 11.3%,reflecting our commitment to revenue growth,operatio
19、nal efficiency,and cost management.Annual box office revenue increased by 30.1%to$599.9 million and theatre food service increased by 28.4%to$425.9 million.Theatre attendance grew by 25.8%to 47.9 million patrons.Box office per patron(“BPP”)of$12.53 and concession per patron(“CPP”)of$8.90 represented
20、 all time annual records for Cineplex.Media revenues increased by 6.2%to$118.7 million,and amusement revenues increased by 19.3%to$96.5 million.Our results clearly demonstrate that we are well positioned to deliver financial success and stability amidst an evolving entertainment industry.Demand for
21、Movie-going and Content Supply Challenges In 2023,Cineplex experienced a remarkable return of guests to our theatres,driven by an increase of high-quality content.Family-friendly films like The Super Mario Bros.Movie and cultural moments like Barbenheimer captivated audiences,resulting in record-bre
22、aking box office revenues.Despite challenges such as the writers and actors strikes,Cineplexs alternative content strategy and international programming initiatives once again proved successful in driving attendance.We consistently took an industry leading market share in international film product,
23、evidenced by 10%of box office revenues coming from international programs compared to 4%generated by our North American peers.These strategies proved to be successful as Cineplex outperformed the North American box office relative to 2022 by a sizable 785 basis points.Enhancing the Guest Experience
24、by Re-Imagining Exhibition At Cineplex,we are committed to providing guests with exceptional experiences.Through our Scene+loyalty program and CineClub membership program,we leverage data analytics to offer personalized experiences and drive customer loyalty.Additionally,our investment in premium of
25、ferings,such as VIP,UltraAVX,IMAX,ScreenX and 4DX auditoriums,ensures guests enjoy films in their chosen format,enhancing their overall cinematic experience.Not only are we ensuring that guests have a variety of ways to immerse themselves in premium experiences,were also investing in technology to p
26、rovide our guests with an elevated digital experience.During 2023,we enhanced our web experience,launched our new app,and rolled out a program for mobile concession ordering.By creating a more personalized guest experience with relevant content and offers,we are focussing on increasing both frequenc
27、y of visits and spend per person.Cineplex Inc.Letter to ShareholdersCINEPLEX INC.2023 ANNUAL REPORT LETTER TO SHAREHOLDERS5As part of our strategy to enhance and expand entertainment offerings within our venues,we proudly opened our second Cineplex Junxion location in 2023.Junxion reimagines the exh
28、ibition experience by bringing movies,amusement gaming,casual dining and live performances all under one roof.Diversification and Deleveraging Our commitment to diversification has been instrumental in driving growth and resilience.Our Location-Based Entertainment(“LBE”)business achieved all-time hi
29、gh revenues of$132.4 million and an adjusted store level EBITDAaL record of$37.9 million.We plan to open three additional LBE locations in 2024,increasing our location count to 16 across Canada by the end of the year.Additionally,our Media business has expanded its reach through strategic partnershi
30、ps,including the addition of the Cadillac Fairview mall network,further strengthening our position as a leading media provider in Canada.The recent sale of Player One Amusement Group Inc.for gross proceeds of$155 million provided us with additional financial flexibility and allowed us to execute our
31、 comprehensive refinancing plan which includes extending debt maturities,removing covenant restrictions,and reducing potential dilutions from existing convertible debentures.As a result,our balance sheet has been bolstered,positioning us for long-term growth and value creation for our shareholders.E
32、mpowering Our Team None of our achievements would be possible without the unwavering dedication and hard work of our remarkable team.From our frontline staff who welcome guests with warmth and enthusiasm to our creative minds behind the scenes who continually innovate and elevate the Cineplex experi
33、ence,each employee plays a pivotal role in our success.Their tireless efforts,passion for excellence,and commitment to delivering exceptional service have been instrumental in driving our financial performance and enhancing the guest experience.As we navigate the evolving landscape of the entertainm
34、ent industry,I am confident that our talented team will continue to be the driving force behind our success.The Path Forward Looking ahead,we remain confident about the future of theatrical exhibition and our diversified businesses.Despite short-term content supply challenges,we anticipate a ramp-up
35、 in box office revenues in the latter half of 2024 and beyond.Our market leadership,commitment to innovation,and robust consumer data,position us for continued success in the years to come.In closing,I want to express my gratitude to the Cineplex team,our Board of Directors,our valued customers and
36、guests,partners,and investors for their unwavering support.Together,we are shaping the future of entertainment and driving value for all stakeholders.Sincerely,Ellis Jacob President and CEO Cineplex Inc.Letter to ShareholdersCINEPLEX INC.2023 ANNUAL REPORT LETTER TO SHAREHOLDERS6MANAGEMENTS DISCUSSI
37、ON AND ANALYSISFebruary 7,2024 The following managements discussion and analysis(“MD&A”)of Cineplex Inc.s(“Cineplex”)financial condition and results of operations should be read together with the consolidated financial statements and related notes of Cineplex(see Section 1,Overview of Cineplex).Thes
38、e financial statements,presented in Canadian dollars,were prepared in accordance with Canadian generally accepted accounting principles(“GAAP”),defined as International Financial Reporting Standards(“IFRS”)as set out in the Handbook of the Canadian Institute of Chartered Professional Accountants.Unl
39、ess otherwise specified,all information in this MD&A is as of December 31,2023 and all amounts are in Canadian dollars.Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS17Non-GAAP and Other Financial MeasuresCineplex reports on certain non
40、-GAAP measures,non-GAAP ratios,supplementary financial measures and total segments measures that are used by management to evaluate Cineplexs performance.In addition,non-GAAP measures are used in measuring compliance with debt covenants.Non-GAAP measures do not have standardized meaning under GAAP a
41、nd may not be comparable to similar measures provided by other issuers.Cineplex includes these measures because management believes that they assist investors in assessing financial performance.The definition,calculation and reconciliation of non-GAAP measures are provided in Section 18,Non-GAAP and
42、 other financial measures.Forward-Looking StatementsCertain information included in this MD&A contains forward-looking statements within the meaning of applicable securities laws.These forward-looking statements include,among others,statements with respect to Cineplexs objectives and goals,and the s
43、trategies to achieve those objectives and goals,as well as statements with respect to Cineplexs beliefs,plans,objectives,expectations,anticipations,estimates and intentions.The words“may”,“will”,“could”,“should”,“would”,“suspect”,“outlook”,“believe”,“plan”,“anticipate”,“estimate”,“expect”,“intend”,“
44、forecast”,“objective”and“continue”(or the negatives thereof),and words and expressions of similar import,are intended to identify forward-looking statements.By their very nature,forward-looking statements involve inherent risks and uncertainties,including those described in Cineplexs Annual Informat
45、ion Form(“AIF”),and in this MD&A.These risks and uncertainties,both general and specific,give rise to the possibility that predictions,forecasts,projections and other forward-looking statements will not be achieved.Certain material factors or assumptions are applied in making forward-looking stateme
46、nts and actual results may differ materially from those expressed or implied in such statements.Cineplex cautions readers not to place undue reliance on these statements as a number of important factors,many of which are beyond Cineplexs control,could cause actual results to differ materially from t
47、he beliefs,plans,objectives,expectations,anticipations,estimates and intentions expressed in such forward-looking statements,including:Cineplexs expectations with respect to liquidity and capital expenditures;its ability to meet its ongoing capital,operating and other obligations,and anticipated nee
48、ds for,and sources of,funds;Cineplexs ability to execute cost-cutting and revenue enhancement initiatives;and risks generally encountered in the relevant industry,competition,customer,legal,taxation and accounting matters.The foregoing list of factors that may affect future results is not exhaustive
49、.When reviewing Cineplexs forward-looking statements,readers should carefully consider the foregoing factors and other uncertainties and potential events.Additional information about factors that may cause actual results to differ materially from expectations and about material factors or assumption
50、s applied in making forward-looking statements may be found in the“Risks and Uncertainties”section of this MD&A.Cineplex does not undertake to update or revise any forward-looking statements,whether as a result of new information,future events or otherwise,except as required by applicable Canadian s
51、ecurities law.Additionally,Cineplex undertakes no obligation to comment on analyses,expectations or statements made by third parties in respect of Cineplex,its financial or operating results or its securities.All forward-looking statements in this MD&A are made as of the date hereof and are qualifie
52、d by these cautionary statements.Additional information,including Cineplexs AIF,can be found on SEDAR+at www.sedarplus.ca.Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS281.OVERVIEW OF CINEPLEXCineplex(TSX:CGX)is a top-tier Canadian bra
53、nd that operates in the Film Entertainment and Content,Amusement and Leisure,and Media sectors.Cineplex offers a unique escape from the everyday to millions of guests through its circuit of over 170 movie theatres and location-based entertainment venues.In addition to being Canadas largest and most
54、innovative film exhibitor,the company operates Canadas favourite destination for Eats&Entertainment(The Rec Room),complexes specially designed for teens and families(Playdium),and a newly launched entertainment concept that brings movies,amusement gaming,dining,and live performances together under o
55、ne roof(Cineplex Junxion).It also operates successful businesses in digital commerce(CineplexS),alternative programming(Cineplex Events),motion picture distribution(Cineplex Pictures),cinema media(Cineplex Media),digital place-based media(Cineplex Digital Media),and until February 1,2024,amusement s
56、olutions(Player One Amusement Group).Providing even more value for its guests,Cineplex is a partner in Scene+,Canadas largest entertainment and lifestyle loyalty program.Proudly recognized as having one of the countrys Most Admired Corporate Cultures,by Waterstone Human Capital,Cineplex employs over
57、 10,000 people in its offices and venues across Canada and the United States.To learn more,visit C.As of December 31,2023,Cineplex owned,leased or had a joint venture interest in 1,631 screens in 158 theatres from coast to coast as well as 13 LBE venues in six provinces.CineplexTheatre locations and
58、 screens at December 31,2023ProvinceLocations(i)Screens3D Digital ScreensUltraAVXIMAX Screens(ii)VIP AuditoriumsD-BOX AuditoriumsRecliner AuditoriumsOther Screens(iii)Ontario67 716 353 42 13 48 49 114 13 Quebec17 220 88 10 3 9 7 17 4 British Columbia25 236 124 16 4 20 16 43 3 Alberta19 201 111 20 2
59、16 17 93 6 Nova Scotia10 87 43 1 1 2 1 Saskatchewan6 54 28 3 1 3 3 16 1 Manitoba5 49 26 3 1 3 4 16 1 New Brunswick5 41 20 2 2 Newfoundland&Labrador2 14 9 1 1 Prince Edward Island2 13 6 1 TOTALS158 1,631 808 97 26 99 102 299 29 Percentage of screens 50%6%2%6%6%18%2%(i)Includes Junxion theatres in Man
60、itoba and Ontario.(ii)All IMAX screens are 3D enabled.Total 3D screens including IMAX screens are 834 screens or 51%of the circuit.(iii)Other screens includes 7 4DX screens,5 Cineplex Clubhouse screens and 17 ScreenX screens.Cineplex-Theatres,screens and premium offerings in the last eight quarters2
61、0232022Q4Q3Q2Q1Q4Q3Q2Q1Theatres158158158157158158159159Screens1,6311,6311,6311,6251,6371,6371,6401,6403D Digital Screens808809809806809809809810UltraAVX Screens9797969595949494IMAX Screens2625252525252524VIP Auditoriums9999999999999999D-BOX Auditoriums102102101100100989898Recliner Auditoriums2992952
62、92283273267267267Other Screens2927272727232222Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS39Cineplex-LBE-at December 31,2023 and 202220232022ProvinceThe Rec RoomPlaydiumThe Rec RoomPlaydiumOntario4 2 4 2 Alberta3 3 Manitoba1 1 Newfou
63、ndland&Labrador1 1 British Columbia1 1 Nova Scotia 1 1 TOTALS10 3 10 3 Sale of Player One Amusement GroupOn November 22,2023,Cineplex Entertainment Limited Partnership(“CELP”)announced it had entered into a definitive share purchase agreement to sell 100%of the issued and outstanding shares of Playe
64、r One Amusement Group Inc.(“P1AG”)for cash proceeds of$155.0 million,subject to customary post-closing adjustments(the“Sale Transaction”).The Sale Transaction closed on February 1,2024.On closing of the Sale Transaction,P1AG and CELP entered into a long-term agreement under which P1AG will continue
65、to supply and service amusement games in Cineplexs theatres and location-based entertainment venues.The proceeds from the Sale Transaction were used to repay bank debt.Cineplex expects to recognize a material gain in connection with the sale of P1AG in the first quarter of 2024.In accordance with IF
66、RS 5,Non-current assets held for sale and discontinued operations,the balance sheet discloses separately the assets and liabilities of P1AG at December 31,2023,and discontinued operations are excluded from the results of continuing operations and are presented as a single amount as after tax profit
67、or loss from discontinued operations in the consolidated statement of operations.As a result,the results of discontinued operations(P1AG)have been excluded from prior period figures as applicable per IFRS 5 to conform to current period presentation(see Section 13,Accounting policies).Other than wher
68、e disclosed,discussions of results and Non-GAAP financial measures,including EBITDA,adjusted EBITDA and adjusted EBITDAaL,in this MD&A are of continuing operations.Reconciliations to previously disclosed balances are presented in Section 19,Reconciliation:Amusement Solutions(P1AG)and will be present
69、ed as such until the Sale Transaction closed on February 1,2024.While P1AG will continue to be a key supplier to Cineplexs exhibition and LBE businesses,its operations were managed separately,and Cineplex does not anticipate changes to its amusement revenue generating activities and margins,and oper
70、ating or general and administrative costs as a result of the sale of P1AG.Capital Structure Cineplex remains focused on de-leveraging and optimizing its capital structure.The use of proceeds from the sale of P1AG to reduce bank debt is a significant step toward that optimization.In the first quarter
71、 of 2024,Cineplex announced a proposal to amend,extend and partially redeem the Convertible Debentures.The implementation of the proposed amendments to the Convertible Debentures is conditional upon completion of other elements of a proposed refinancing including:(i)a private placement offering of n
72、ew secured notes;(ii)the entering into of a new senior credit facility and repayment of the existing senior credit facilities;and(iii)the repayment of the existing Notes Payable.Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS4101.2 FINA
73、NCIAL HIGHLIGHTSFinancial highlightsFourth QuarterFull Year(in thousands of dollars,except theatre attendance in thousands of patrons and per share and per patron amounts)20232022Change(ii)20232022Change(ii)(Section 1)(i)(Section 1)(i)Total revenues$315,078$309,920 1.7%$1,388,894$1,102,881 25.9%Thea
74、tre attendance9,599 9,208 4.2%47,862 38,045 25.8%Net(loss)income from continuing operations$(12,102)$9,572 NM$138,051$(9,679)NMNet income from discontinued operations$3,148$596 428.2%$29,113$9,792 197.3%Net(loss)income(iii)$(8,954)$10,168 NM$167,164$113 NMNet(loss)income as a percentage of sales fro
75、m continuing operations(iii)(3.8)%3.1%-6.9%9.9%(0.9)%10.8%Cash provided by operating activities$83,385$51,107 63.2%$196,094$78,279 150.5%Box office revenues per patron(“BPP”)(iv)$12.90$13.06 -1.2%$12.53$12.12 3.4%Concession revenues per patron(“CPP”)(iv)$9.28$8.93 3.9%$8.90$8.72 2.1%Adjusted EBITDA(
76、v)$65,902$67,744 -2.7%$322,962$220,168 46.7%Adjusted EBITDAaL(v)$24,178$25,830 -6.4%$157,363$54,201 190.3%Adjusted EBITDAaL from discontinued operations(v)$5,352$5,367 -0.3%$35,732$27,471 30.1%Adjusted EBITDAaL including discontinued operations(v)$29,530$31,197 -5.3%$193,095$81,672 136.4%Adjusted EB
77、ITDAaL margin from continuing operations(vi)7.7%8.3%-0.6%11.3%4.9%6.4%Adjusted free cash flow(v)$(1,047)$(265)295.1%$83,691$(13,509)NMAdjusted free cash flow per share(vi)$(0.016)$(0.004)300.0%$1.320$(0.213)NM(Loss)earnings per share from continuing operations-basic(iii)$(0.19)$0.15 NM$2.18$(0.15)NM
78、Earnings per share from discontinued operations-basic$0.05$0.01 400.0%$0.46$0.15 206.7%(Loss)earnings per share-basic(iii)$(0.14)$0.16 NM$2.64$NM(Loss)earnings per share from continuing operations-diluted(iii)$(0.19)$0.15 NM$1.80$(0.15)NMEarnings per share from discontinued operations-diluted$0.05$0
79、.01 400.0%$0.32$0.15 113.3%(Loss)earnings per share-diluted(iii)$(0.14)$0.16 NM$2.12$NM(i)The results of discontinued operations(P1AG)have been excluded from prior period figures as applicable per IFRS 5 to conform to current period presentation.All amounts are from continuing operations unless note
80、d.See Section 13,Accounting policies.(ii)Throughout this MD&A,changes in percentage amounts are calculated as 2023 value less 2022 value.(iii)2023 includes recovery of approximately$150.2 million related to the recognition of deferred income tax assets recognized during the second quarter and expens
81、es related to the Cineworld transaction and other transactions or litigation outside the normal course of business in the amount of$0.6 million(2022-$0.9 million)for the fourth quarter and$3.4 million(2022-$3.6 million)for the full year.(iv)Represents a supplementary financial measure.See Section 18
82、,Non-GAAP and other financial measures.(v)Represents a non-GAAP financial measure.See Section 18,Non-GAAP and other financial measures.(vi)Represents a non-GAAP ratio.See Section 18,Non-GAAP and other financial measures.1.3 KEY DEVELOPMENTS IN 2023 The following describes certain key business initia
83、tives undertaken and results achieved during 2023 in each of Cineplexs core business areas:FILM ENTERTAINMENT AND CONTENTTheatre ExhibitionReported annual box office revenues of$599.9 million,an increase of$138.6 million or 30.1%from$461.3 due to a 25.8%increase in theatre attendance as a result of
84、the success of highly anticipated films released during the year,including Barbie,The Super Mario Bros.Movie and Oppenheimer.Reported an annual record BPP of$12.53,$0.41 or 3.4%higher than the$12.12 reported during the prioryear.Opened Cineplexs second Junxion location at Cineplex Junxion Erin Mills
85、 in Mississauga,Ontario on MayCineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS51117,2023.Cineplex Junxion is an innovative entertainment destination that brings movies,amusement gaming,dining and live performances together for the ultima
86、te guest experience.Signed a purchase agreement with IMAX Corporation for several new IMAX systems,including oneIMAX screen that opened at Cineplex Cinemas Coquitlam and VIP in Coquitlam,British Columbia onDecember 5,2023.Opened two ScreenX auditoriums at Scotiabank Theatre Montreal in Montreal,Queb
87、ec and SilverCityBrampton Cinemas in Brampton,Ontario on December 15,2023.Welcomed nearly 700,000 guests on August 27,2023,in celebration of National Cinema Day,marking thesecond busiest day in Cineplex history and donating a portion of ticket sales to the Canadian PicturePioneers Student Assistance
88、 Awards Program.Launched the new Cineplex Mobile App,providing guests with an improved experience while browsing formovies and theatres,purchasing movie tickets,discovering exciting events at The Rec Room and Junxionand using CineClub discounts and Scene+rewards.The CineClub subscription program rea
89、ched over 140,000 members,providing members with benefitsaccessible across Cineplexs businesses nationwide including Cineplex theatres LBE venues and theCineplex Store.Theatre Food ServiceReported annual theatre food service revenues of$425.9 million,an increase of$94.3 million or 28.4%compared to t
90、he prior year primarily due to a 25.8%increase in theatre attendance.Reported annual CPP of$8.90,an increase of 0.18 or 2.1%compared to the prior year,primarily due to anincrease in average spend.Began the national rollout of mobile food and beverage ordering,beginning with theatres in select Ontari
91、otheatres during the fourth quarter,allowing guests to select their order,select a time frame and collect theirorder prior to the beginning of the movie.Alternative Programming and Distribution As part of the theatrical distribution partnership with Lionsgate,Cineplexs distribution business(Cineplex
92、Pictures)distributed several films,including the highly successful John Wick:Chapter 4 and HungerGames:The Ballad of Songbirds and Snakes in 2023.Cineplex extended its theatrical distributionpartnership with Lionsgate until December 31,2024.Expanded alternative programming offerings with major conce
93、rt events,including the record-breakingTAYLOR SWIFT|THE ERAS TOUR,which took home the top spot during the fourth quarter.2023 marks Cineplexs biggest year for international programming,delivering 10%of Cineplexs annualbox office revenues.Strong performing international films,include Animal(Hindi)and
94、 Pathaan(Hindi),which have become Cineplexs top two Indian and international movies of all time.Cineplex alsorepresented over 80%of the total North American box office market share for other successful internationalfilms including,Kali Jotta(Punjabi),Annhi Dea Mazaak Ae(Punjabi)and Godday Godday Cha
95、a(Punjabi).Event Cinema presented an assortment of big-screen programs in 2023,including three concerts fromcinema-favourite Andre Rieu;exciting stage performances with the Broadway hit Waitress:The Musical;acollection of anime titles,including Demon Slayer and Studio Ghibli classics;as well as cont
96、inuedpresentations from the Metropolitan Opera featuring popular titles,including Don Giovanni,Fedora andFlorencia en el Amazonas.Digital Commerce Total registered users for Cineplex Store increased 3.5%compared to the prior year,reachingapproximately 2.4 million registered users.Curated Cineplex St
97、ore collections for Black History Month,Asian History Month,National IndigenousPeoples Day,Pride Month and National Day for Truth and Reconciliation to highlight diverse experiences,cultures and artistic expressions.MEDIAReported annual media revenues of$118.7 million,an increase of$6.9 million or 6
98、.2%compared to theprior year.Continued leveraging expertise in data and analytics to drive revenues.Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS612Cinema Media Reported annual cinema media revenues of$80.1 million,an increase of$7.8
99、million or 10.8%over theprior year.Digital Place-Based Media Reported annual revenues of$38.6 million,a decrease of$0.9 million or 2.2%over the prior year.Signed an agreement with Cadillac Fairview to operate a network of 200 digital displays in 18 CadillacFairview shopping centres,and to sell digit
100、al and static media,and sponsorships,for its extensive networkof highly desirable shopping destinations across Canada.LOCATION-BASED ENTERTAINMENTReported all-time record annual revenues of$132.4 million,an increase of$21.5 million or 19.4%compared to the prior year.Reported all-time record annual a
101、djusted store level EBITDAaL of$37.9 million,an increase of$3.6million or 10.4%compared to the prior year.Announced plans for one Playdium location in Toronto,Ontario at Cadillac Fairview Mall,which isexpected to open during the fourth quarter of 2024.LOYALTYMembership in the Scene+loyalty program i
102、ncreased to over 14 million members as at December 31,2023.Welcomed Home Hardware Stores Limited to the Scene+loyalty program,providing members withadditional opportunities to earn and redeem points.CORPORATE Recognized income taxes recovery of$150.2 million during the second quarter of 2023 on the
103、basis ofcontinued strong return to profitability providing a reasonable expectation that previously derecognized net deferred income tax assets will be utilized to offset future periods of taxable income.Celebrated Community Day on November 4,2023 with a morning of free,family-friendly movies withse
104、lect discounted concessions,where one dollar from every concession order of select items,XSCAPE Play Card and food and beverage orders and game bands at LBE venues were donated to BGC Canada.On November 22,2023,Cineplex announced it had entered into a definitive agreement to sell 100%of theissued an
105、d outstanding shares of P1AG for a purchase price of$155.0 million,subject to customary post-closing adjustments,Cineplex expects to recognize a material gain in the first quarter of 2024.On December 13,2023,Cineplex entered into the Eighth Amended and Restated Credit AgreementAmendment which extend
106、ed the maturity date of the of the credit facility from November 13,2024 to November 13,2025,amended the standard administrative provisions relating to the potential replacement of benchmark rates,and made certain other administrative amendments(Section 7.4,Long-term debt).2.CINEPLEXS BUSINESS AND S
107、TRATEGYCineplexs mission statement is“Passionately delivering exceptional experiences.”All of its efforts are focused on this mission and it is Cineplexs goal to consistently provide guests and customers with exceptional experiences.Cineplexs current operations are primarily conducted in three main
108、areas:film entertainment and content,media,and amusement and leisure including location-based entertainment,all supported by the Scene+loyalty program.Cineplexs key strategic areas of focus include the following:Continue to enhance and expand Cineplexs presence as an entertainment destination for Ca
109、nadians in-theatre,at-home and on-the-go;Capitalize on core media strengths and infrastructure to provide continued growth of Cineplexs mediabusiness both inside and outside theatres;Drive growth within businesses by leveraging opportunities to optimize value,realize synergies,implement customer-cen
110、tric technology and leverage big data across the Cineplex ecosystems;andPursue opportunities that capitalize on Cineplexs core strengths.Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS713Cineplex uses the Scene+loyalty program and datab
111、ase as a strategic asset to link these areas of focus and drive customer acquisition and spending across all lines of business.Until January 31,2024,Cineplex operated a fourth business area,amusement and leisure,through P1AG.Diversified Entertainment and Media CompanyKey elements of this strategy in
112、clude going beyond movies to reach customers in new ways and maximizing revenue per patron.Cineplex has implemented in-theatre initiatives to improve the overall entertainment experience,including increased premium offerings,enhanced in-theatre services,alternative pricing strategies,continued devel
113、opment of the Scene+loyalty and CineClub subscription programs,and initiatives in theatre food service such as optimizing and adding product offerings and improving service execution.The ultimate goal of these in-theatre customer service initiatives is to maximize revenue per patron and increase the
114、 frequency of movie-going at Cineplexs theatres.While box office revenues(which include alternative programming)typically account for the largest portion of Cineplexs revenues,Cineplex has diversified its revenue streams through cinema media,digital place-based media,location-based entertainment,the
115、 Cineplex Store,promotions and other revenue streams.Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS814Net income(loss)(millions)(i)$30.3$(588.0)$(237.4)$(9.7)$138.120192020202120222023Net income(loss)as a%of sales(i)2.0%(164.1)%(42.7)%
116、(0.9)%9.9%20192020202120222023Adjusted EBITDAaL(millions)(i)(ii)$209.0$(171.2)$(93.0)$54.2$157.420192020202120222023Adjusted EBITDAaL Margin(i)(ii)14.1%(47.8)%(16.7)%4.9%11.3%20192020202120222023(i)The results of discontinued operations have been excluded from prior period figures as applicable per
117、IFRS 5 to conform to current period presentation.(ii)2023 includes expenses related to the Cineworld transaction and other transactions or litigation outside the normal course of business in the amount of$3.4 million(2022-$3.6 million).3.CINEPLEXS BUSINESSESFactoring in the sale of P1AG,Cineplexs op
118、erations are primarily conducted in three main areas:film entertainment and content,media,and location-based entertainment,all supported by the Scene+loyalty program.Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS915FILM ENTERTAINMENT A
119、ND CONTENTTheatre ExhibitionTheatrical exhibition is Cineplexs core business.Box office revenues are highly dependent on the marketability,quality and appeal of the film product released by the major motion picture studios.The motion picture industry consists of three principal activities:production
120、,distribution and exhibition.Production involves the development,financing and creation of feature-length motion pictures.Distribution involves the promotion and exploitation of motion pictures in a variety of different channels.Theatrical exhibition continues to be a key channel for new motion pict
121、ure releases and is Cineplexs core business function.Source:Movie Theatre Association of Canada(MTAC)Canadian Industry Box Office(in millions)$1,022.0$235.0$345.0$674.0$898.020192020202120222023Cineplex believes that the following are important factors in the film exhibition industry in Canada:Impor
122、tance of theatrical success in establishing movie brands and subsequent movies.Theatrical exhibitionis the initial and most important channel for new motion picture releases.Cineplexs ability to operatesuccessfully depends upon the availability,diversity and appeal of filmed content,the ability of C
123、ineplex tolicense films and the performance of these films in Cineplexs markets.Cineplex primarily licenses first-run films,the success of which is dependent upon their quality,as well as on the marketing efforts of filmstudios and distributors.While studios have experimented with different release
124、strategies throughsecondary channels such as streaming,initial theatrical releases continue to be the most important channelfor film success as evidenced by the successful box office releases of Barbie,The Super Mario Bros.Movieand Oppenheimer.Cineplex is able to diversify its content offering throu
125、gh the evolving theatricalexhibition landscape with the entrance of streamers like Apple and Amazon opting for initial theatricalreleases for films such as Air,Killers of the Flower Moon,Napolean and Saltburn.Continued supply of successful films.Studios are increasingly producing film franchises,suc
126、h as the Marvel&DC universes,Fast&Furious and Avatar among others.Additionally,new franchises continue to bedeveloped.When the first film in a franchise is successful,subsequent films in the franchise benefit fromexisting public awareness and anticipation.The result is that such features typically a
127、ttract large audiencesand generate strong box office revenues.The success of a broader range of film genres also benefits filmexhibitors.In 2024,the studios are currently planning to release a strong slate of films,including Dune:Part Two,Kung Fu Panda 4,Ghostbusters:Frozen Empire,Godzilla x Kong:Th
128、e New Empire,Challengers,The Garfield Movie,Kingdom of the Plant of the Apes,Inside Out 2,A Quiet Place:Day One,Despicable Me 4,Deadpool 3,Beetlejuice 2,Transformers One,Joker:Folie Deux,Smile 2,Venom 3,Gladiator 2,Wicked,The Lord of the Rings:The War of the Rohirrim,Mufasa:The Lion King,and Sonicth
129、e Hedgehog 3.In spite of changing release models,Cineplex remains confident that traditional studioswill continue to commit a significant number of films to an exclusive theatrical window,in addition to anincrease in theatrical film product released by streaming companies.Cineplex Inc.Managements Di
130、scussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS1016Convenient and affordable form of out-of-home entertainment.Cineplexs BPP was$12.53 and$12.12 in2023 and 2022,respectively.Excluding the impact of Cineplexs premium-priced product,BPP was$10.91and$10.35 in 2023 a
131、nd 2022,respectively.The movie-going experience continues to provide value andcompares favourably to alternative forms of out-of-home entertainment in Canada such as professionalsporting events or live theatre,and with Cineplex,Scene+members enjoy the ability to earn points towardsCineplex products
132、as well as discounts and special offers.CineClub members also have benefits accessibleacross Cineplexs businesses nationwide including Cineplex theatres,the Cineplex Store and LBE venues.Providing a variety of premium and enhanced guest theatre experiences.Premium priced theatre offeringsinclude 3D,
133、4DX,UltraAVX,VIP,IMAX,D-BOX,ScreenX and Cineplex Clubhouse.BPP for premium-priced product was$16.32 in 2023,and accounted for 41.4%of total box office revenues in 2023.Recentenhancements to,and offerings at,the current circuit include the addition of six all-recliner seatingauditoriums,including one
134、 UltraAVX auditorium with D-BOX seating at the second Junxion location atCineplex Junxion Erin Mills,which opened on May 17,2023.The theatre circuit was also enhanced withone IMAX screen at Cineplex Cinemas Coquitlam and VIP,two ScreenX auditoriums at ScotiabankTheatre Montreal and SilverCity Brampt
135、on Cinemas and lastly,a retrofit of all-recliner seating at tenauditoriums,with one auditorium also enhanced with an UltraAVX screen and another auditoriumenhanced with D-Box seating at SilverCity St.Vital Cinemas.Box Office Revenues(millions)$705.5$132.8$236.3$461.3$599.920192020202120222023Box Off
136、ice Revenue per Patron$10.63$10.17$11.77$12.12$12.5320192020202120222023Cineplexs leading market position enables it to effectively manage film,food service and other theatre-level costs,thereby maximizing operating efficiencies.Cineplex seeks to achieve incremental operating savings through best pr
137、actices,operational efficiencies and negotiating improved supplier contracts.In addition,Cineplex continues to evaluate its existing theatre portfolio on an ongoing basis.Theatre Attendance(millions)66.413.120.138.047.920192020202120222023Cineplex theatres are also ideal locations for meetings and c
138、orporate events.Organizations,particularly corporations with offices across the country,can use Cineplexs theatres and digital technology for annual meetings,product launches and employee or customer events,producing revenue streams independent of film exhibition.Cineplex opened its second Junxion l
139、ocation at Cineplex Junxion Erin Mills in Mississauga,Ontario on May 17,2023.Cineplex Junxion offers a best-in-class guest experience by bringing together movies,amusement gaming,dining and live performances in one venue.Theatre Food ServiceCineplexs theatre food service business offers guests a ran
140、ge of food choices to enhance their theatre experience while generating strong profit margins for the company.Cineplexs theatres feature its internally developed brands:Outtakes and Melt.In certain Cineplex theatres,food offerings are also enhanced with third party brands such as Starbucks.Cineplex
141、Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS1117Cineplex continually focuses on process improvements designed to increase the speed of service at the concession counter in addition to optimizing the RBOs available at Cineplexs theatres.Each o
142、f the wide range of menu items available at Outtakes locations,expanded liquor service available in theatres,partnerships with Uber Eats and Skip The Dishes as well as the expanded menu and the licensed lounge service available at VIP Cinemas are designed to reach a wider market and to increase both
143、 purchase incidence and transaction value.Digital menu boards installed across the circuit offer flexibility in menu offerings to guests which contribute to an improved guest experience while also creating additional revenue opportunities.During the fourth quarter of 2023,Cineplex began the national
144、 rollout of mobile food and beverage ordering,providing guests with greater purchase flexibility.Theatre Food Service Revenues(millions)$446.6$99.6$172.3$341.7$434.420192020202120222023Concession Revenue per Patron$6.73$6.99$7.93$8.72$8.9020192020202120222023Alternative ProgrammingAlternative progra
145、mming includes Cineplexs international film programming as well as content offered under its Event Cinema brand offerings,including The Metropolitan Opera,sporting events,concerts and dedicated event screens.International film programming includes Bollywood content as well as Cantonese,Hindi,Punjabi
146、,Mandarin,Korean and Filipino language films,amongst others,in select theatres across the country based on local demographics.This programming attracts a more diverse audience,expanding Cineplexs demographic reach and enhancing revenues,and delivered 10%of Cineplexs annual box office revenues during
147、 2023,compared to 8%in the prior year.The success of Cineplexs alternative programming events has led to offerings including major concert events from K-Pop sensations BTS(BTS:Yet to Come)and Andr Rieu(Andr Rieu in Dublin),Metropolitan Opera productions including the live broadcast of Don Giovanni a
148、nd Falstaff and screening select television content on the big screen.Cineplex offers the Classic Film Series and Family Favourites programming during non-peak hours to enhance theatre utilization rates.As additional content becomes available,Cineplex will continue to expand its alternative programm
149、ing offerings.Cineplex Pictures focuses on the acquisition of feature film rights for both theatrical release and in home viewing in Canada.In addition to Lionsgates releases,Cineplex Pictures distributed films including Theres Always Hope and The Wrath of Becky.On January 5,2023,Cineplex Pictures e
150、ntered into a theatrical distribution partnership with Lionsgate to distribute its 2023 film slate in Canada,including PLANE,John Wick:Chapter 4,Are You There God?Its Me,Margaret,About My Father and Hunger Games:The Ballad of Songbirds and Snakes.Cineplex extended its theatrical distribution partner
151、ship with Lionsgate until December 31,2024.Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS1218Digital CommerceCineplexs digital products consist of ,the Cineplex mobile app and the Cineplex Store.Cineplex has developed into one of the l
152、eading entertainment sites in Canada,a destination of choice for Canadians seeking movie entertainment information on the internet.The website offers streaming video,movie information,show-times and the ability to buy tickets online,entertainment news and box office reports as well as advertising an
153、d digital commerce opportunities.To complement ,the Cineplex mobile app is available as a free download for a wide variety of devices,providing guests with the ability to find show-times,buy tickets as well as find information relating to the latest movie choices and movie-related entertainment cont
154、ent in addition to providing mobile food and beverage ordering.These features and others enable Cineplex to engage and interact with its guests online and on-the-go,allowing Cineplex to offer engaging,targeted and sponsored content to visitors and advertisers,resulting in opportunities to generate a
155、dditional revenues.The Cineplex Store offers a catalog of over 12,500 titles in digital form(transactional video-on-demand(“TVOD”)including Home Premiere offerings(premium video on demand(“PVOD”)and premium electronic sell through(“PEST”).Cineplex continues to enhance the user experience including r
156、eleasing new Cineplex Store user interfaces and experiences across the website and multiple connected televisions and device apps.Cineplexs strong brand association with movies and well-established partnerships with movie studios combined with Cineplexs website,app and the Cineplex Store provide Cin
157、eplex with the ability to expand its touchpoints to consumers across multiple channels.MEDIACineplexs media businesses cover two major categories:cinema media,which incorporates advertising mediums related to theatre exhibition,and digital place-based media which provides digital signage solutions.M
158、edia Revenues(millions)$196.8$65.4$65.3$111.7$118.720192020202120222023Cinema MediaCinema media incorporates advertising mediums related to theatre exhibition.Cineplexs media advertising arrangements are impacted by theatre attendance levels which drive impressions and ultimately impact media revenu
159、e generated by Cineplex.Cineplexs core cinema media offerings include:Show-time advertising,which runs just prior to the movie trailers in a darkened auditorium with limiteddistractions;Pre-show advertising,featured on the big screen as guests settle in to enjoy their movie night,in the periodprior
160、to Show-time;Digital lobby advertising and digital poster cases located in high traffic areas featuring big,bold digitalsignage;Online and mobile advertising sales through and the Cineplex mobile app;Leveraging expertise in data and analytics to drive revenues;andProviding sales for CDM DOOH network
161、s.Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS1319Cineplexs theatres also provide opportunities for advertisers special media placements(including floor and door coverings,window clings,standees,banners,samplings,activations and lobb
162、y domination setups).In addition to these individual offerings,Cineplex offers integrated solutions that can cross over some or all of the above-mentioned platforms.Advertisers can utilize these forms of media individually or take advantage of an integrated advertising program spanning multiple plat
163、forms.In partnership with its digital commerce platforms,Cineplex offers online media packages that include page dominations,page skins,pre-roll and post-roll advertising;all with geo-targeting capabilities.Cineplex also generates revenues from the sale of sponsorships and advertising at LBE venues.
164、Digital Place-Based MediaCineplex Digital Media(“CDM”)is an end-to-end digital experience company that offers digital signage solutions and in-store retail media networks for leading brands in shopping centres,restaurants,retailers,and entertainment destinations.CDM embraces its unique connection wi
165、th Cineplex Media to focus on media-led networks,such as its mall networks,and retail media networks,to further monetize these networks and offer new value and business models to clients.CDM continues to focus on providing its clients with end-to-end solutions for leading brands in shopping centres,
166、retailers,financial institutions and restaurants,utilizing a host of technical solutions and services that optimize digital signage to deliver the right content,to the right audience at the right time.CDM now operates Canadas largest digital out of home(“DOOH”)shopping media network(in public spaces
167、 such as shopping malls and office towers)with the recent addition(Q4)of Cadillac Fairview,with exclusive media sales rights for top performing shopping centres,including 9 of the top 10 busiest malls in Canada.Cineplex Digital Medias project management,system design,network operations,and creative
168、services teams,combined with the support of Cineplexs Media sales team have Cineplex well positioned to expand its media reach throughout its current infrastructure as well as in numerous place-based advertising locations across the country.Cineplex believes that the strength of its digital place-ba
169、sed media assets make it a leader in the indoor digital signage industry and provide a platform for significant growth throughout North America.LOCATION-BASED ENTERTAINMENTLocation-based EntertainmentCineplex operates LBE establishments under the brand names The Rec Room and Playdium,as well as othe
170、r family entertainment centres.The Rec Room is a social entertainment destination targeting millennials featuring a wide range of entertainment options including simulation,redemption,video,recreational gaming,attractions,and a live entertainment venue for watching a wide range of entertainment prog
171、ramming.These entertainment options are complemented with an upscale casual dining environment,featuring an open kitchen and contemporary menu,as well as a larger bar with a wide range of digital monitors and a large screen for watching sporting and other major events.The Rec Room earns revenues fro
172、m food and beverage service,from amusement,gaming and leisure attraction play,and from ticket sales for events held within the destination.Cineplex has ten locations of The Rec Room.Playdium targets families and teens in mid-sized communities across Canada.Cineplex has three locations of Playdium.In
173、-Theatre GamingCineplexs in-theatre gaming business features Cineplexs 50 XSCAPE Entertainment Centres as well as arcade games in select Cineplex theatres,LBE venues and Junxion locations,with all of the games supplied by P1AG.Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL
174、REPORT MANAGEMENTS DISCUSSION&ANALYSIS1420 LOYALTYAs co-owners of the Scene+loyalty program,Cineplex,Scotiabank and Empire Company Limited bring together the full benefits of SCENE with Scotia Rewards and Empires family of brands.The Scene+loyalty program also provides Cineplex with significant data
175、 and a more comprehensive understanding of the demographics and behaviours of its audience.Scene+is a customer loyalty program designed to offer members discounts and the opportunity to earn and redeem points.Scene+members can earn and redeem points for purchases at Cineplexs theatres,at its locatio
176、n-based entertainment establishments,at the Cineplex Store as well as at locations operated by select program partners,including Home Hardware.Scene+members can also earn and redeem points at a wide variety of popular retailers,including Empires family of brands and redeem points as statement credit
177、s on certain Scotiabank products,as well as book flexible travel.The Scene+loyalty program has been well received as evidenced by the strong membership,high engagement and satisfaction levels of its program members.Management believes Scene+will drive further growth and engagement,expanding the memb
178、ership base by providing members with more reward options and ways to earn and redeem points.Through Scene+,Cineplex has gained a more thorough understanding of its customers,driven increased customer frequency,increased overall customer spending across its businesses and provides Cineplex with the
179、targeted ability to communicate directly and regularly with customers.With the recent growth in the Scene+membership base,Cineplex is able to gain access to new customers and expand its base and penetration rates through targeted offers by Scene+.The Scene+customer database has allowed Cineplex to s
180、egment the member population and provide special offers to Cineplexs guests,implement targeted marketing programs and deliver tailored messages to subsets of the membership base,providing members with relevant information and offers which in turn drive increased frequency and spend.Cineplex continue
181、s to influence consumer behavior through the use of Scene+points and experience upgrades for Scene+members through its initiatives as well as in partnership with movie studios.Cineplex has gained tremendous insight into customer behavior with over 17 years of data collected.Cineplex will continue to
182、 focus on leveraging this data through marketing automation to drive customer behavior as well as accelerating the adoption of artificial intelligence and machine learning for more robust consumer insights.Scene+will continue to build its strategic marketing partnerships with participating partners
183、across Canada,providing promotions and offerings.4.OVERVIEW OF OPERATIONSRevenuesCineplex generates revenues primarily from box office and food service sales.These revenues are affected primarily by theatre attendance levels and by changes in BPP and CPP.Box office revenue represented 43.2%of revenu
184、e in 2023.The following table presents the revenue mix for comparative periods:Revenue mix%by period20232022202120202019(Section 1)(Section 1)(Section 1)(Section 1)Box office 43.2%41.9%42.5%37.0%47.4%Food service 34.8%34.6%33.6%30.2%32.5%Media 8.5%10.1%11.8%18.4%13.3%Amusement 6.9%7.3%6.1%5.0%3.4%Ot
185、her 6.6%6.1%6.0%9.4%3.4%Total 100.0%100.0%100.0%100.0%100.0%Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS1521After adjusting for the sale of P1AG after year end,Cineplex has three reportable segments,film entertainment and content,med
186、ia,and location-based entertainment.The reportable segments are business units offering differing products and services and are managed separately due to their distinct natures and are based on the information used by Cineplexs chief operating decision makers.Revenue mix%by periodFull Year20232022(S
187、ection 1)Film Entertainment and Content 82.0%79.9%Media 8.5%10.0%LBE 9.5%10.1%Total 100.0%100.0%A key component of Cineplexs business strategy is to position itself as the leading exhibitor in the Canadian market by providing customers with an exceptional entertainment experience.Cineplexs share of
188、the Canadian theatre exhibition market based on Canadian industry box office revenues was approximately 75%for both the quarter and for the year ended December 31,2023.The commercial appeal of the films and alternative content released during a given period,and the success of marketing as well as pr
189、omotion for those films by film studios,distributors and content providers all drive theatre attendance.BPP is affected by the mix of film and alternative content product that appeals to certain audiences(such as children or seniors who pay lower ticket prices),ticket prices during a given period an
190、d the appeal of available premium priced product that increases BPP.While BPP is impacted by CineClub,the Cineplex Tuesdays program and the Scene+loyalty program,these programs are designed to increase theatre attendance frequency at Cineplexs theatres.Cineplexs main focus is to drive incremental vi
191、sits to theatres,to employ a ticket price strategy which takes into account the local demographics at each theatre and to maximize BPP through premium offerings.Food service revenues are comprised primarily of concession revenues,arising from food and beverage sales at theatre locations including th
192、e newly introduced Junxion concept,LBE venues including The Rec Room and Playdium.In addition,food service revenues include home delivery services by Uber Eats and Skip the Dishes.CPP represents theatre food service revenues divided by theatre attendance,and is impacted by the theatre food service p
193、roduct mix,theatre food service prices,film genre,promotions,discounts for CineClub members,and the Scene+loyalty program.CPP can fluctuate from quarter to quarter depending on the genre of film product playing.Cineplex believes the Scene+and CineClub programs drive incremental purchase incidence,in
194、creasing overall revenues.Cineplex focuses primarily on growing CPP by optimizing the product offerings,improving operational excellence,improving the guest experience with enhancements to the Cineplex Mobile App and providing greater flexibility with online food and beverage ordering,and strategic
195、pricing to increase purchase incidence and transaction value.Food service revenues from LBE include food and beverage revenues from the various bars and restaurants located throughout the venues.Media revenues include both cinema media(Cineplex Media)and digital place-based media(CDM)revenues.Cinepl
196、ex Media generates revenues primarily from selling pre-show and show-time advertising in Cineplexs theatres.Cineplexs media advertising arrangements are impacted by theatre attendance levels which drive impressions and ultimately impact media revenue generated by Cineplex.Additionally,Cineplex Media
197、 sells media placements throughout Cineplexs circuit including digital poster cases,as well as sponsorship and advertising in LBE venues.Cineplex Media also sells digital advertising for ,the Cineplex mobile app and on third party networks operated by CDM.CDM designs,installs,maintains and operates
198、digital signage networks in four verticals including DOOH in public spaces such as shopping malls and office towers,quick service restaurants,financial institutions and retailers.CDM revenue is impacted by mall attendance which affect impressions and revenue generated.Amusement revenues include XSCA
199、PE Entertainment Centres and game rooms in theatres as well as revenues generated at LBE venues.Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS1622Cineplex generates other revenues from the Cineplex Store,online booking fees,promotional
200、 activities,screenings,private parties,corporate events and breakage on gift card sales and prepaid products.Cost of Sales and ExpensesFilm cost represents the film rental fees paid to distributors for films exhibited in Cineplexs theatres.Film costs are calculated as a percentage of box office reve
201、nue and are dependent on various factors including the performance of the film.Film costs are accrued on the related box office receipts at either mutually agreed-upon terms established prior to the opening of a film,or estimated terms where a mutually agreed settlement is reached upon conclusion of
202、 a films run,depending upon the film licensing arrangement.There can be significant variances in film cost percentage between quarters due to,among other things,the concentration of box office revenues amongst the top films in the period with stronger performing films typically having a higher film
203、cost percentage.Cost of food service represents the cost of concession items and other theatre food service items sold,and varies with changes in concession and other theatre food service revenues as well as the quantity and mix of concession and other food service offerings sold.Cost of food and be
204、verages sold at LBE is also included in cost of food service.Depreciation-right-of-use assets,represents the depreciation of Cineplexs right-of-use assets related to leases.Depreciation is calculated on a straight-line basis from the date of commencement of the lease to the earlier of the end of the
205、 useful life of the asset or the end of the lease term.Depreciation and amortization-other,represents the depreciation and amortization of Cineplexs property,equipment and leaseholds,as well as certain of its intangible assets.Depreciation and amortization are calculated on a straight-line basis ove
206、r the useful lives of the assets.Loss(gain)on disposal of assets represents the gain recognized on assets or components of assets that were sold or otherwise disposed.Other costs are comprised of theatre occupancy expenses,other operating expenses and general and administrative expenses.These catego
207、ries are described below.Theatre occupancy expenses include lease related expenses,percentage rent,property related taxes,business related taxes and insurance and exclude cash rent accounted for as obligations or interest under IFRS 16,Leases.Other operating expenses consist of fixed and variable ex
208、penses,with the largest component being theatre salaries and wages.Although theatre salaries and wages,include a fixed cost component,these expenses vary in relation to revenues as theatre staffing levels are adjusted to handle fluctuations in theatre attendance.Other components of this category inc
209、lude marketing which includes the cost of Scene+points issued,advertising,media,LBE,loyalty,digital commerce,supplies and services,utilities and maintenance.To the extent these costs are variable,they can be managed with changes in business volumes.General and administrative expenses are primarily c
210、osts associated with managing Cineplexs business,including film buying,marketing and promotions,operations and theatre food service management,accounting and financial reporting,legal,treasury,design and construction,real estate development,communications and investor relations,information systems a
211、nd administration.Included in these costs are payroll(including Cineplexs Omnibus Incentive Plan costs),occupancy costs related to Cineplexs corporate offices,professional fees(such as public accountant and legal fees)and travel and related costs.Cineplex maintains general and administrative staffin
212、g and associated costs at a level that it deems appropriate to manage and support the size and nature of its theatre and LBE portfolio and its business activities.Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS1723Accounting for Joint A
213、rrangementsThe financial statements incorporate the operating results of joint arrangements in which Cineplex has an interest using either the equity accounting method(for joint ventures and associates)or recognizing Cineplexs share of the assets,liabilities,revenues and expenses in Cineplexs consol
214、idated results(for joint operations).Under IFRS 11,Cineplexs 33.3%interest in Scene+,50%share of one IMAX auditorium in Ontario,and 50%interest in YoYos Yogurt Cafe(“YoYos”)are classified as joint ventures or associates.Cineplexs investment in YoYos is carried at nil value.Cineplex disposed of its 7
215、8.2%interest in the Canadian Digital Cinema Partnership(“CDCP”)on December 16,2022.Through equity accounting,Cineplexs share of the results of operations for these joint ventures and associates are reported as a single item in the statements of operations,Share of income of joint ventures and associ
216、ates.Theatre attendance for the IMAX auditorium held in a joint venture is not reported in Cineplexs consolidated theatre attendance as the line-by-line results of the joint venture are not included in the relevant lines in the statement of operations.In addition to the joint ventures which are equi
217、ty accounted,Cineplex consolidates its 50%share of assets,liabilities,revenues and expenses of its joint operation which recognizes the revenues and costs of redemptions of points issued prior to the launch of Scene+.Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MAN
218、AGEMENTS DISCUSSION&ANALYSIS18245.RESULTS OF OPERATIONSOther than where disclosed,discussions of results and Non-GAAP financial measures,including EBITDA,adjusted EBITDA and adjusted EBITDAaL,in this MD&A are of continuing operations.5.1 SELECTED FINANCIAL DATAThe following table presents summarized
219、 financial data for Cineplex for the three most recently completed financial years(expressed in thousands of dollars except shares outstanding,per share data and per patron data,unless otherwise noted):Year ended December 31,2023Year ended December 31,2022Year ended December 31,2021(Section 1)(vii)(
220、Section 1)(vii)Box office revenues$599,903$461,272$236,320 Food service revenues483,149 381,386 186,998 Media revenues118,655 111,728 65,330 Amusement revenues96,507 80,920 34,191 Other revenues90,680 67,575 33,548 Total revenues1,388,894 1,102,881 556,387 Film cost323,412 238,897 114,674 Cost of fo
221、od service113,987 87,702 41,683 Depreciation-right-of-use assets87,657 93,512 99,093 Depreciation and amortization-other assets88,881 89,466 92,824 Loss(gain)on disposal of assets2,910(57,748)(28,362)Other costs(a)624,771 553,583 351,975(Reversal)impairment of long-lived assets(19,880)3,717 Costs of
222、 operations1,241,618 985,532 675,604 Net income(loss)from continuing operations138,051(9,679)(237,417)Net income(loss)from discontinued operations(vii)29,113 9,792(11,305)Net income(loss)(vi)167,164 113(248,722)Adjusted EBITDA(i)$322,962$220,168$47,224 Adjusted EBITDAaL(i)$157,363$54,201$(93,004)Adj
223、usted EBITDAaL from discontinued operations(i)$35,732$27,471$8,709 Adjusted EBITDAaL including discontinued operations(i)$193,095$81,672$(84,295)(a)Other costs include:Theatre occupancy expenses71,557 62,378 40,945 Other operating expenses482,112 426,743 251,734 General and administrative expenses(v
224、)71,102 64,462 59,296 Total other costs$624,771$553,583$351,975 Earnings(loss)per share from continuing operations-basic(v)$2.18$(0.15)$(3.75)Earnings(loss)per share from discontinued operations-basic$0.46$0.15$(0.18)Earnings(loss)per share -basic(v)$2.64$(3.93)Earnings(loss)per share from continuin
225、g operations-diluted(v)$1.80$(0.15)$(3.75)Earnings(loss)per share from discontinued operations-diluted$0.32$0.15$(0.18)Earnings(loss)per share-diluted(v)$2.12$(3.93)Total assets$2,271,492$2,150,454$2,114,838 Long-term debt(iv)$817,439$824,888$739,211 Shares outstanding at period end63,401,529 63,359
226、,240 63,344,298 Adjusted free cash flow per share(ii)$1.320$(0.213)$(2.486)Box office revenue per patron(iii)$12.53$12.12$11.77 Concession revenue per patron(iii)$8.90$8.72$7.93 Film cost as a percentage of box office revenues 53.9%51.8%48.5%Theatre attendance(in thousands of patrons)(iii)47,862 38,
227、045 20,080 Theatre locations(at period end)158 158 160 Theatre screens(at period end)1,631 1,637 1,652 Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS1925(i)Represents a non-GAAP financial measure.See Section 18,Non-GAAP and other finan
228、cial measures.(ii)Represents a non-GAAP ratio.See Section 18,Non-GAAP and other financial measures.(iii)Represents a supplementary financial measure.See Section 18,Non-GAAP and other financial measures.(iv)Represents the principal component as presented on the financial statements net of any equity
229、component and unamortized costs of long-term debt,Debentures,and Notes Payable.Excludes share-based compensation,lease obligations,fair value of interest rate swap agreements,post-employment benefit obligations and other liabilities.(v)2023 includes expenses related to the Cineworld transaction and
230、other transactions or litigation outside the normal course of business in the amount of$3.4 million(2022-$3.6 million).(vi)2023 includes recovery of approximately$150.2 million related to the recognition of deferred income tax assets recognized during the second quarter and expenses related to the C
231、ineworld transaction and other transactions or litigation outside the normal course of business in the amount of$3.4 million(2022-$3.6 million).(vii)The results of discontinued operations(P1AG)have been excluded from prior period figures as applicable per IFRS 5 to conform to current period presenta
232、tion.All amounts are from continuing operations unless noted.See Section 13,Accounting policies.Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS20265.2 OPERATING RESULTS FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31,2023 Total revenues
233、Total revenues for the three months ended December 31,2023 increased$5.2 million or 1.7%to$315.1 million as compared to the prior year.Total revenues for the year ended December 31,2023 increased$286.0 million or 25.9%to$1.4 billion as compared to the prior year.A discussion of the factors affecting
234、 the changes in box office,food service,media,amusement and other revenues for the period is provided below.Non-GAAP and other financial measures discussed throughout this MD&A,including adjusted EBITDA,adjusted EBITDAaL,adjusted store level EBITDAaL,adjusted EBITDAaL margin,adjusted store level EBI
235、TDAaL margin,adjusted free cash flow,theatre attendance,BPP,premium priced product,same theatre metrics,CPP,film cost percentage,food service cost percentage and concession margin per patron are defined and discussed in Section 18,Non-GAAP and other financial measures.Box office revenuesThe followin
236、g table highlights the movement in box office revenues,theatre attendance and BPP for the quarter and the full year(in thousands of dollars,except theatre attendance reported in thousands of patrons and per patron amounts,unless otherwise noted):Box office revenuesFourth QuarterFull Year20232022Chan
237、ge20232022ChangeBox office revenues$123,841$120,248 3.0%$599,903$461,272 30.1%Theatre attendance(i)9,599 9,208 4.2%47,862 38,045 25.8%Box office revenue per patron(i)$12.90$13.06 -1.2%$12.53$12.12 3.4%BPP excluding premium priced product(i)$11.36$10.64 6.8%$10.91$10.35 5.4%Same theatre box office re
238、venues(i)$121,869$119,701 1.8%$592,032$459,290 28.9%Same theatre attendance(i)9,454 9,159 3.2%47,260 37,835 24.9%Total box from premium priced product(i)36.3%50.0%-13.7%41.4%41.8%-0.4%(i)Represents a supplementary financial measure.See Section 18,Non-GAAP and other financial measures.Box office cont
239、inuityFourth QuarterFull YearBox OfficeTheatre AttendanceBox OfficeTheatre Attendance2022 as reported$120,248 9,208$461,272 38,045 Same theatre attendance change3,845 294 114,407 9,424 Impact of same theatre BPP change(1,676)18,336 New and acquired theatres(i)1,667 123 7,562 579 Disposed and closed
240、theatres(i)(243)(26)(1,674)(186)2023 as reported$123,841 9,599$599,903 47,862(i)See Section 18,Non-GAAP and other financial measures.Represents theatres opened,acquired,disposed or closed subsequent to the start of the prior year comparative period and is used to report on Cineplexs supplementary fi
241、nancial measures.Fourth Quarter 2023 Top Cineplex Films3D%Box Fourth Quarter 2022 Top Cineplex Films3D%Box 1 TAYLOR SWIFT|THE ERAS TOUR 9.6%1 Avatar:The Way of Watera 25.2%2 The Hunger Games:The Ballad of Songbirds and Snakes 9.4%2 Black Panther:Wakanda Forevera 19.9%3 Five Nights at Freddys 7.1%3 B
242、lack Adam 9.0%4 Wonka 6.5%4 Smile 6.5%5 Animal 4.5%5 Ticket to Paradise 3.6%Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS2127Full Year 2023 Top Cineplex Films3D%Box Full Year 2022 Top Cineplex Films3D%Box 1 Barbie 8.1%1 Top Gun:Maveri
243、ck 9.4%2 The Super Mario Bros.Moviea 6.6%2 Avatar:The Way of Watera 6.8%3 Oppenheimer 4.9%3 Doctor Strange In The Multiverse of Madnessa 5.8%4 Avatar:The Way of Watera 4.6%4 Black Panther:Wakanda Forevera 5.4%5 Spider-Man:Across The Spider-Verse 4.0%5 The Batman 5.3%Fourth Quarter Box office revenue
244、s increased by$3.6 million or 3.0%to$123.8 million,compared to$120.2 million recorded in the prior year.This increase was primarily due to a 0.4 million or 4.2%increase in theatre attendance from 9.2 million to 9.6 million.The increase in theatre attendance is partially attributed to the success of
245、TAYLOR SWIFT|THE ERAS TOUR,which generated$93.2 million during its North American opening weekend and$261.7 million globally,since its release.The increase is also attributed to Cineplexs continued focus on its content broadening strategy by increasing international and alternative programming,as ev
246、idenced by Animal,outperforming Hollywood blockbusters during the first two weeks of its release during the fourth quarter.Film release date shifts and production delays related to the impact of the writers and actors strikes affected the quarter.Notable titles that were initially scheduled to be re
247、leased during the fourth quarter but were postponed to 2024 due to the impact of the strikes include Dune:Part Two,Ghostbusters:Afterlife 2 and Challengers.Furthermore,the strikes also prevented actors from promoting films at premieres or festivals,further impacting box office results for the films
248、that were released during the fourth quarter but prior to the resolution of the strikes.BPP for the three months ended December 31,2023 was$12.90,a decrease of$0.16 or 1.2%from$13.06 reported in the prior year.The decrease in BPP is primarily due to the decrease in premium priced products,which acco
249、unted for 36.3%of the total box office compared to 50.0%in the prior year.Highly anticipated films,Avatar:The Way of Water and Black Panther:Wakanda Forever were released during the fourth quarter of 2022,and accounted for approximately 45%of the 2022 box office,driving guests to premium experiences
250、,particularly 3D content,compared to the current year,where none of the top five films were released with 3D offerings.Full YearFor the full year period,box office revenues increased by$138.6 million or 30.1%to$599.9 million,compared to$461.3 million recorded in the prior year.The increase was prima
251、rily due to a 9.8 million increase in theatre attendance,as a result of strong titles,including Barbie,The Super Mario Bros.Movie and Oppenheimer.The Barbenheimer phenomenon achieved Cineplexs second highest grossing box office weekend of all time and The Super Mario Bros.Movie set a record for the
252、biggest opening for an animated film ever.BPP during the full year period was$12.53,which increased by$0.41 or 3.4%from$12.12 reported in the prior year.The increase was primarily due to moderate price increases.The percentage of box office revenues from premium priced offerings remained flat,accoun
253、ting for 41.4%of Cineplexs box office revenues for the year ended December 31,2023,compared to 41.8%in the prior year.Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS2228Food service revenues The following table highlights the movement i
254、n food service revenues,theatre attendance and CPP for the quarter and the full year(in thousands of dollars,except theatre attendance and same store attendance reported in thousands of patrons and per patron amounts):Food service revenuesFourth QuarterFull Year20232022Change20232022ChangeFood servi
255、ce-theatres$89,101$82,242 8.3%$425,865$331,567 28.4%Food delivery-theatres2,060 2,201 -6.4%8,568 10,125 -15.4%Food service-LBE13,292 12,725 4.5%48,716 39,694 22.7%Total food service revenues$104,453$97,168 7.5%$483,149$381,386 26.7%Theatre attendance(i)$9,599$9,208 4.2%47,862 38,045 25.8%CPP(i)(ii)$
256、9.28$8.93 3.9%$8.90$8.72 2.1%Same theatre food service revenues(i)$87,499$81,782 7.0%$419,482$329,862 27.2%Same theatre attendance(i)9,454 9,159 3.2%47,260 37,835 24.9%(i)Represents a supplementary financial measure.See Section 18,Non-GAAP and other financial measures.(ii)Food service revenue from L
257、BE and delivery is not included in the CPP calculation.Theatre food service revenue continuityFourth QuarterFull YearTheatre Food ServiceTheatre AttendanceTheatre Food ServiceTheatre Attendance2022 as reported$82,242 9,208$331,567 38,045 Same theatre attendance change2,625 294 82,167 9,424 Impact of
258、 same theatre CPP change3,091 7,454 New and acquired theatres(i)1,340 123 6,115 579 Disposed and closed theatres(i)(197)(26)(1,438)(186)2023 as reported$89,101 9,599$425,865 47,862(i)See Section 18,Non-GAAP and other financial measures.Represents theatres opened,acquired,disposed or closed subsequen
259、t to the start of the prior year comparative period and is used to report on Cineplexs supplementary financial measures.Fourth Quarter Food service revenues are comprised primarily of concession revenues,which includes food service sales at theatre locations,and through delivery services including U
260、ber Eats and Skip the Dishes.Food service revenues also include food and beverage sales at The Rec Room and Playdium.Food service revenues increased by$7.3 million or 7.5%to$104.5 million during the fourth quarter,compared to$97.2 million recorded in the prior year.Theatre food service revenues incr
261、eased by$6.9 million or 8.3%to$89.1 million as compared to the prior year.The increase in theatre food service revenue was primarily due to a 4.2%increase in theatre attendance.Additionally,the increase in theatre food service revenue is also attributed to an increase in average guest spend compared
262、 to the prior year.During the fourth quarter,CPP increased by$0.35 or 3.9%from the prior year,from$8.93 to a fourth quarter record of$9.28.LBE food service revenue also increased by$0.6 million or 4.5%to an all-time quarterly record of$13.3 million.Full YearFor the full year period,food service reve
263、nues increased by$101.8 million or 26.7%to$483.1 million,compared to$381.4 million recorded in the prior year,primarily due to a$94.3 million increase in theatre food services.The increase in theatre food service revenues was primarily due to a 25.8%increase in theatre attendance.Additionally,there
264、was an increase in average guest spend when compared to the prior year.For the full year period,CPP increased by$0.18 or 2.1%from$8.72 to an annual record of$8.90.LBE food service revenue also increased by$9.0 million or 22.7%to$48.7 million.Cineplex Inc.Managements Discussion and AnalysisCINEPLEX I
265、NC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS2329Media revenuesThe following table highlights the movement in media revenues for the quarter and the full year(in thousands of dollars):Media revenuesFourth QuarterFull Year20232022Change20232022ChangeCinema media$28,466$30,229 -5.8%$80,057$72,
266、275 10.8%Digital place-based media12,836 14,324 -10.4%38,598 39,453 -2.2%Total media revenues$41,302$44,553 -7.3%$118,655$111,728 6.2%The following table shows a breakdown of the nature of digital place-based media revenues for the quarter and the full year(in thousands of dollars):Digital place-bas
267、ed media revenuesFourth QuarterFull Year20232022Change20232022ChangeProject revenues(i)$2,941$5,023 -41.4%$11,774$15,293 -23.0%Other revenues(ii)9,895 9,301 6.4%26,824 24,160 11.0%Total digital place-based media revenues$12,836$14,324 -10.4%$38,598$39,453 -2.2%(i)Project revenues include hardware sa
268、les and professional services.(ii)Other revenues include sales of software and its support as well as media advertising.Fourth Quarter Total media revenues decreased by$3.3 million or 7.3%to$41.3 million during the fourth quarter,compared to$44.6 million recorded in the prior year.The decrease durin
269、g the fourth quarter was partially due to the$1.8 million or 5.8%decrease in Cinema Media,due to the decrease in Scene+revenues,compared to the prior year,where there was an increase in spending for the launch of new Scene+partners.Digital place-based media revenues decreased by$1.5 million or 10.4%
270、during the fourth quarter,compared to the prior year due to less project revenues but were partially offset by the increase in recurring monthly revenue and DOOH advertising revenue.Full YearFor the full year period,total media revenues increased by$6.9 million or 6.2%to$118.7 million,compared to$11
271、1.7 million recorded in the prior year,due to the return of moviegoers with the release of highly anticipated movies,resulting in increased attendance during the full year.This ultimately resulted in a$7.8 million or 10.8%increase in cinema media revenues,due to increased advertising opportunities f
272、or cinema advertising from advertisers in a variety of sectors.Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS2430Amusement revenuesThe following table highlights the movement in amusement revenues for the quarter and the full year(in t
273、housands of dollars):Amusement revenues Fourth QuarterFull Year20232022Change20232022Change(Section 1)(ii)(Section 1)(ii)Amusement revenue-LBE$19,027$17,608 8.1%$80,300$68,636 17.0%Amusement revenue-exhibition(i)3,475 3,035 14.5%16,207 12,284 31.9%Total amusement revenues from continuing operations$
274、22,502$20,643 9.0%$96,507$80,920 19.3%(i)Cineplex receives a venue revenue share on games revenues earned at in-theatre game rooms and XSCAPE Entertainment Centres.Amusement-Cineplex exhibition reports the total of this venue revenue share which is consistent with the historical presentation of Cine
275、plexs amusement revenues.(ii)The results of discontinued operations(P1AG)have been excluded from prior period figures as applicable per IFRS 5 to conform to current period presentation.All amounts are from continuing operations unless noted.See Section 13,Accounting policies.Fourth Quarter Compared
276、to the prior year,amusement revenues increased by$1.9 million or 9.0%during the fourth quarter,to$22.5 million.The increase was primarily due to a$1.4 million increase in LBE amusement revenues.Following the sale of P1AG,and under the same terms as the existing agreement,Cineplex will continue to re
277、ceive a venue revenue share on games revenues earned at in-theatre game rooms and XSCAPE Entertainment Centres.Full YearFor the full year period,amusement revenues increased by$15.6 million or 19.3%compared to the prior year.The increase was primarily due to a$11.7 million increase in LBE amusement
278、revenues.The following table presents the LBE adjusted store level EBITDAaL for the quarter and the full year(in thousands of dollars):LBE SummaryFourth QuarterFull Year20232022Change20232022ChangeFood service revenues$13,292$12,725 4.5%$48,716$39,694 22.7%Amusement revenues19,027 17,608 8.1%80,300
279、68,636 17.0%Media and other revenues1,674 1,293 29.5%3,362 2,502 34.4%Total revenues$33,993$31,626 7.5%$132,378$110,832 19.4%Cost of food service3,472 3,396 2.2%13,559 11,095 22.2%Operating expenses before adjustments(i)18,233 16,224 12.4%69,903 54,681 27.8%Cash rent related to lease obligations(ii)
280、2,748 2,740 0.3%10,968 10,681 2.7%Total$24,453$22,360 9.4%$94,430$76,457 23.5%Adjusted store level EBITDAaL(iii)$9,540$9,266 3.0%$37,948$34,375 10.4%Adjusted store level EBITDAaL Margin(iv)28.1%29.3%-1.2%28.7%31.0%-2.3%(i)Includes operating costs of LBE.Pre-opening costs relating to LBE and overhead
281、 relating to management of LBE portfolio are not included as they are non-recurring costs.(ii)Cash rent that has been reallocated to offset the lease obligations.(iii)Represents a non-GAAP financial measure.See Section 18,Non-GAAP and other financial measures.(iv)Represents a non-GAAP ratio.See Sect
282、ion 18,Non-GAAP and other financial measures.Fourth Quarter During the fourth quarter,revenues increased by$2.4 million or 7.5%from the prior year to a fourth quarter record of$34.0 million,fueled by fourth quarter records of food service revenues($13.3 million)and.amusement service revenues($19.0 m
283、illion).The increase in revenue is primarily due to an increase in visitation,increased game Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS2531spending,and an increase in groups and events bookings during the current period.Adjusted st
284、ore level EBITDAaL was a fourth quarter record of$9.5 million,and adjusted store level EBITDAaL margin during the fourth quarter was 28.1%.The increase in adjusted store level EBITDAaL is due to the higher amusement revenues which historically contribute higher margins than food service revenues to
285、LBE locations.Adjusted store level EBITDAaL margin decreased marginally during the current period partially due to marketing initiatives to drive current and future visitation.Full YearFor the full year period,revenues increased by$21.5 million or 19.4%from the prior year.The increase in revenue is
286、primarily due to higher groups and events bookings and higher amusement sales during the period and an increase in visitation.The increase in revenue during the full year period is also partially attributed to the success of special occasions and events.Adjusted store level EBITDAaL for the full yea
287、r period was$37.9 million and adjusted store level EBITDAaL margin during the full year period was 28.7%.The increase in adjusted store level EBITDAaL is consistent with the increase in revenues.However,adjusted store level EBITDAaL margin decreased compared to the prior year because operating expen
288、ses were partially offset by$2.7 million of government subsidies during 2022.Furthermore,the decrease in adjusted store level EBITDAaL margin is due to sales mix,with amusement revenues historically contributing higher margins than food service to LBE locations.Other revenues The following table hig
289、hlights the other revenues which includes revenues from online booking fees,Cineplex Pictures distribution,the Cineplex Store,promotional activities,screenings,private parties,corporate events,breakage on gift card sales and revenues from management fees for the quarter and the full year(in thousand
290、s of dollars):Other revenuesFourth QuarterFull Year20232022Change20232022ChangeTotal other revenues$22,980$27,308 -15.8%$90,680$67,575 34.2%Fourth Quarter and Full YearThe quarterly decrease in other revenues is primarily due to lower breakage related to gift cards and other prepaid products which w
291、as partially offset by higher revenues from distribution revenue and venue rentals.The online booking fee,introduced on June 15,2022,that applies to tickets purchased through Cineplexs mobile app and website,remained flat compared to the prior year and generated$5.2 million(2022-$5.2 million)during
292、the fourth quarter.The full year increase in other revenues is primarily due to the online booking fee that generated$27.3 million(2022-$11.7 million)during the full year period.The increase in other revenues during the full year is also attributed to higher revenues from distribution revenue,venue
293、rentals and breakage related to gift cards and other prepaid products.Film cost The following table highlights the movement in film cost and the film cost percentage for the quarter and the full year(in thousands of dollars,except film cost percentage):Film costFourth QuarterFull Year20232022Change2
294、0232022ChangeFilm cost$65,357$63,567 2.8%$323,412$238,897 35.4%Film cost percentage(i)52.8%52.9%-0.1%53.9%51.8%2.1%(i)Represents a supplementary financial measure.See Section 18,Non-GAAP and other financial measures.Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANA
295、GEMENTS DISCUSSION&ANALYSIS2632Film cost varies primarily with box office revenues and can vary from quarter to quarter usually based on the relative strength of the titles exhibited during the period,impacted by film cost terms which vary by title and distributor.Fourth QuarterThe higher film cost
296、during the fourth quarter,over the prior year,is positively correlated to the increase in box office revenues recognized during the period.Full YearThe increase in both film cost and film cost percentage during the full year over the prior year,is positively correlated to the increase in box office
297、revenues recognized during the full year due to the release of strong film titles including Barbie,The Super Mario Bros.Movie and Oppenheimer.Cost of food serviceThe following table highlights the movement in cost of food service and food service cost as a percentage of food service revenues(“conces
298、sion cost percentage”)for both theatres and LBE for the quarter and the full year(in thousands of dollars,except percentages and margins per patron):Cost of food serviceFourth QuarterFull Year20232022Change20232022ChangeCost of food service-theatre$22,314$19,275 15.8%$100,428$76,607 31.1%Cost of foo
299、d service-LBE3,472 3,396 2.2%13,559 11,095 22.2%Total cost of food service$25,786$22,671 13.7%$113,987$87,702 30.0%Theatre concession cost percentage(i)24.5%22.8%1.7%23.1%22.4%0.7%LBE food cost percentage(i)26.1%26.7%-0.6%27.8%28.0%-0.2%Theatre concession margin per patron(i)$7.01$6.89 1.7%$6.84$6.7
300、6 1.2%(i)Represents a supplementary financial measure.See Section 18,Non-GAAP and other financial measures.Fourth Quarter and Full YearCost of food service at the theatres varies primarily with theatre attendance,the cost of food and materials purchased as well as the quantity and mix of offerings s
301、old.Cost of food service at LBE venues varies primarily with the volume of guests who visit the location as well as the quantity and mix between food and beverage items sold.The increase in cost of food service during the fourth quarter and full year period is positively correlated to the increase i
302、n food service revenues recognized during the quarter and full year period.Theatre concession cost percentage increased during the fourth quarter due to sales mix and food cost increases exceeding sales price increases in the period.Theatre concession cost percentage increased marginally during the
303、full year compared to the prior year.LBE food cost percentage decreased marginally during both the fourth quarter and full year compared to the prior year.Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS2733Depreciation and amortization
304、The following table highlights the movement in depreciation and amortization expenses during the quarter and the full year(in thousands of dollars):Depreciation and amortization expensesFourth QuarterFull Year20232022Change20232022Change(Section 1)(Section 1)Depreciation of property,equipment and le
305、aseholds$19,463$19,813 -1.8%$79,246$80,139 -1.1%Amortization of intangible assets and other2,356 2,366 -0.4%9,635 9,327 3.3%Sub-total-depreciation and amortization-other assets$21,819$22,179 -1.6%$88,881$89,466 -0.7%Depreciation-right-of-use assets22,259 22,799 -2.4%87,657 93,512 -6.3%Total deprecia
306、tion and amortization from continuing operations$44,078$44,978 -2.0%$176,538$182,978 -3.5%Fourth Quarter and Full YearDepreciation of property,equipment and leaseholds decreased by$0.4 million,or 1.8%during the quarter and by$0.9 million or 1.1%during the full year compared to the prior year periods
307、 due to fully depreciated property,equipment and leaseholds.Amortization of intangible assets and other remained flat during the quarter and increased by$0.3 million or 3.3%during the full year compared to the prior year,due to software developments and additions.Depreciation of right-of-use assets
308、decreased by$0.5 million or 2.4%during the quarter and by$5.9 million or 6.3%during the full year period compared to the prior year.The decrease was primarily due to modifications to lease agreements which reduced the related depreciation recognized.Reversal of impairment of long-lived assetsThe fol
309、lowing table highlights the movement in impairment of long-lived assets during the quarter(in thousands of dollars):Reversal of impairment of long-lived assetsFourth QuarterFull Year20232022Change20232022ChangeReversal of impairment of property,equipment and leaseholds,net$(10,204)-100.0%$(10,204)-1
310、00.0%Reversal of impairment of right-of-use assets (9,676)-100.0%(9,676)-100.0%Reversal of impairment of long-lived assets$(19,880)-100.0%$(19,880)-100.0%Cineplex generally performs its annual test for impairment of goodwill and indefinite-lived intangible assets in the fourth quarter,in accordance
311、with the policy described in its annual consolidated financial statements.Assessment of impairment for long-lived assets,including property,equipment,leaseholds,right-of-use assets,intangible assets and goodwill is performed more frequently as specific events or circumstances dictate triggering even
312、ts and changes in circumstances indicate that the carrying amount of the asset group may not be fully recoverable.In addition,for assets other than goodwill and indefinite-lived intangible assets,indicators are assessed considering whether an impairment loss previously recognized may no longer exist
313、 or may have decreased.Fair value less cost to sell is determined using discounted cash flow models that incorporate significant key assumptions relating to attendance and the related revenue growth rates,and discount rates.Further,other assumptions are required pertaining to variable and fixed cash
314、 flows,and operating margins.Cineplex projects revenue,operating margins and cash flows for a period of five years,and applies a perpetual long-term growth rate thereafter.Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS2834The attendanc
315、e and revenue growth rates are derived from Cineplexs Board approved budget which considers projected attendance based on film releases,past experience,as well as economic,industry and market trends.Discount rates applied to the groups of goodwill cash-generating units(“CGUs”)represent Cineplexs ass
316、essment of the risks specific to each group of CGUs regarding the time value of money and individual risks of the underlying assets.Cineplex used discount rates between 9.7%and 15.2%(2022-between 10.3%and 14.3%),and perpetual growth rates between 0.5%and 1.0%(2022-between 0.5%and 1.0%),which are con
317、sistent with the observed long-term average growth rates in the exhibition,amusement and leisure,and digital media industries.The determination of fair value less costs of disposal is sensitive to the growth rates,discount rates,and long-term growth rates used.The risk premiums expected by market pa
318、rticipants related to uncertainties about the industry and assumptions relating to future cash flows may differ,depending on economic conditions and other events.Accordingly,it is reasonably possible that future changes in assumptions may negatively impact future assessments of the recoverable amoun
319、t for groups of CGUs.For the exhibition CGUs,a 30%change in forecasted attendance and related revenue growth rates would result in a material impairment loss however management does not believe this is reasonably likely.For the CDM CGU,a 2%change in the discount rate or a 5%change in the revenue gro
320、wth rates would result in a material impairment loss.Cineplex determined that no other reasonable change in assumptions would cause the recoverable amount of any of its CGUs to fall below its carrying value.Based on Cineplexs assessment of indicators of impairment for long-lived asset CGUs there is
321、no impairment loss recognized in the current period.In the prior period two theatre location CGUs were noted to have impairment indicators.Based on the results of the impairment tests for these CGUs,Cineplex recognized non-cash impairment charges of$3,503 to property,equipment and leaseholds and$398
322、 to right-of-use assets for the year ended December 31,2022.Cineplex reviews previously impaired assets for indicators of impairment recovery at each balance sheet date.During the current period there were no reversals of previously recognized impairment,however in the prior period,the renegotiation
323、 of a favourable rent arrangement at a location in its theatre operations resulted in significantly higher cash flows and the reversal of previously recognized impairment.The recovery of the LBE portfolio has been significant,consistent with out-of-home dining and the amusement industry.As a result,
324、Cineplex has reversed previously recognized impairments.Based on the results,Cineplex recognized a reversal of previously recognized impairment of$13,707 to property,equipment and leaseholds and$10,074 to right-of-use assets for the year ended December 31,2022.At the end of each future reporting per
325、iod Cineplex will assess whether there are indications that the impairment loss recognized for an asset other than goodwill may no longer exist or may have decreased.If any such indication exists,Cineplex will estimate the recoverable amount of that asset and may reverse previously recorded impairme
326、nt losses.Loss(gain)on disposal of assets The following table shows the movement in the loss(gain)on disposal of assets during the quarter and the full year(in thousands of dollars):Loss(gain)on disposal of assetsFourth QuarterFull Year20232022Change20232022Change(Section 1)(Section 1)Loss(gain)on d
327、isposal from continuing operations$1,553$(3,327)NM$2,910$(57,748)NMFourth Quarter and Full YearThe change in the loss(gain)on disposal of assets recognized during the fourth quarter and full year is due to minimal activity on the disposal of Cineplexs assets during the current periods,compared to th
328、e recognition of a Cineplex Inc.Managements Discussion and AnalysisCINEPLEX INC.2023 ANNUAL REPORT MANAGEMENTS DISCUSSION&ANALYSIS2935$3.8 million gain recognized during the fourth quarter of 2022 for the windup of Cineplexs investment in CDCP,which took place on December 16,2022.Cineplex also recog
329、nized a$50.1 million gain related to the reorganization of Scene LP as specific non-financial milestones were completed during the third quarter of 2022.Other costsOther costs include three main sub-categories of expenses:theatre occupancy expenses,which capture associated occupancy costs for Cinepl
330、exs theatre operations;other operating expenses,which include the costs related to running Cineplexs film entertainment and content,media,and LBE businesses;and general and administrative expenses,which includes costs related to managing Cineplexs operations,including head office expenses.Please see
331、 the discussions below for more details on these categories.The following table highlights the movement in other costs for the quarter and the full year(in thousands of dollars):Other costsFourth QuarterFull Year20232022Change20232022Change(Section 1)(Section 1)Theatre occupancy expenses$16,592$15,5
332、04 7.0%$71,557$62,378 14.7%Other operating expenses121,810 122,168 -0.3%482,112 426,743 13.0%General and administrative expenses17,992 16,163 11.3%71,102 64,462 10.3%Total other costs from continuing operations$156,394$153,835 1.7%$624,771$553,583 12.9%Theatre occupancy expensesThe following table h
333、ighlights the movement in theatre occupancy expenses for the quarter and the full year(in thousands of dollars):Theatre occupancy expensesFourth QuarterFull Year20232022Change20232022ChangeCash rent paid/payable(i)(ii)$36,976$37,168 -0.5%$148,930$147,797 0.8%Other occupancy(ii)17,122 16,727 2.4%72,038 68,043 5.9%One-time items(iii)(911)(1,543)-41.0%(2,025)(3,839)-47.3%Total theatre occupancy inclu
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